Bolwell (Liquidator), in the matter of Mandalay Road Holdings Pty Ltd (in liq) v Goldsmith-Medd (Trustee) [2022] FCA 1300

Bolwell (Liquidator), in the matter of Mandalay Road Holdings Pty Ltd (in liq) v Goldsmith-Medd (Trustee) [2022] FCA 1300

The Trust was validly constituted because the Trust Deed showed certainty of intention, subject matter and object, and equity would not allow the trust to fail merely because the named corporate trustee did not yet exist. Mr Barber became trustee personally when he executed the Trust Deed and the purchase contract, and after incorporation the Company ratified his pre-incorporation actions and assumed the role of trustee. The Property was therefore held by the Company as trustee of the Trust, and because the Company acted solely as trustee, the possession, realisation and distribution of sale proceeds were governed by Parts 5.4B and 5.6 of the Corporations Act 2001 (Cth). The liquidator...

Jurisdiction
Australia
Judgment Date
02 November 2022
Procedural Posture
Interlocutory Application for Directions Pursuant to S 90 15 of the Insolvency Practice Schedule (corporations) / Directions in Winding Up and Receivership
Outcome
Directions made; plaintiffs entitled to the directions sought.
Legal Topics
['validity of Trust Deed Where Named Corporate Trustee Was Not Incorporated' 'pre Incorporation Actions and Ratification' "trustee Company's Capacity" 'sale Proceeds of Trust Property' 'liquidator and Receiver Directions' 'application of Parts 5.4 B and 5.6 of the Corporations Act 2001 (cth)']
['corporations Law' 'trusts and Trustees' 'corporate Insolvency' 'practice and Procedure'] ['validity of Trust Deed Where Named Corporate Trustee Was Not Incorporated' 'pre Incorporation Actions and Ratification' "trustee Company's Capacity" 'sale Proceeds of Trust Property' 'liquidator and Receiver Directions' 'application of Parts 5.4 B and 5.6 of the Corporations Act 2001 (cth)']

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Procedural Posture

Interlocutory Application for Directions Pursuant to S 90 15 of the Insolvency Practice Schedule (corporations) / Directions in Winding Up and Receivership

Legal Issues

  1. 1 ['Was the Trust validly constituted?' 'Did Mr Barber become the trustee of the Trust upon execution of the Trust Deed and did the Company become the trustee of the Trust upon its incorporation?' 'Was the Property held by the Company in its capacity as trustee of the Trust?' 'Should the Court give directions to the Liquidator and Receiver pursuant to s 90-15 of the IPSC?' 'Is the realisation and any distribution of the proceeds of sale of the Property governed by Parts 5.4B and 5.6 of the Act?']

Ratio Decidendi

The Trust was validly constituted because the Trust Deed showed certainty of intention, subject matter and object, and equity would not allow the trust to fail merely because the named corporate trustee did not yet exist. Mr Barber became trustee personally when he executed the Trust Deed and the purchase contract, and after incorporation the Company ratified his pre-incorporation actions and assumed the role of trustee. The Property was therefore held by the Company as trustee of the Trust, and because the Company acted solely as trustee, the possession, realisation and distribution of sale proceeds were governed by Parts 5.4B and 5.6 of the Corporations Act 2001 (Cth). The liquidator...

Court Disposition

Directions made; plaintiffs entitled to the directions sought.

Orders

  • ['Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), the first plaintiff and the third plaintiff would be justified and otherwise acting reasonably in proceeding on the basis that the Mandalay Road Trust was validly constituted under a deed dated 4 January 2013 notwithstanding that the Company...